If factor cost is ₹320 and net indirect tax is ₹35 then what price will the buyer pay?
Answer and explanation
Correct answer: ₹355
The buyer pays the market price, not the factor cost. The conversion rule is Market Price = Factor Cost + Net Indirect Taxes. Substituting the values gives ₹320 + ₹35 = ₹355. Hence option C is correct. ₹320 is the factor-cost value before the tax adjustment, and ₹285 incorrectly subtracts NIT; ₹390 is an unsupported total.
Frequently asked questions
What is the correct answer to this question?
₹355
Why is this the correct answer?
The buyer pays the market price, not the factor cost. The conversion rule is Market Price = Factor Cost + Net Indirect Taxes. Substituting the values gives ₹320 + ₹35 = ₹355. Hence option C is correct. ₹320 is the factor-cost value before the tax adjustment, and ₹285 incorrectly subtracts NIT; ₹390 is an unsupported total.
Which subject and chapter does this question cover?
This is a Class 12 Economics question. Chapter: National Income and Related Aggregates. Topic: Aggregates related to national income - Market price and factor cost.
Student feedback
Was this question useful?
👍 0 Helpful 👎 0 Not helpful
Yes 0% No 0%
0 responsesStudent Reviews
No published reviews yet.
